Defining Trading Success

We all want to be successful in whatever we do, but success means different things to different people. For traders most of us define success as profits. If we win, we are successful. If we lose, we are a failure. Harsh but true for most traders and how they look at their process of trading.

Unrealistic expectations are the root cause for most traders losses or lack of success. We here about trading, do a little research, talk to a few traders, take a course, join a forum, etc. We have all been there. None of those avenues help to put trading in to realistic perspective. Years ago my illusions about trading had me thinking that everyone was buying the bottom and holding for 10 points, but me. I thought everyone was profitable, but me. I thought everyone was hitting their daily goal, but me. But we know that is not true. Few simply buy and hold from the open for 10 points and make money every day. It’s also tough to get a 10 point trade in a 5 point range.

It has been said that “desire” is the root of all suffering. What do you desire in your trading? Is it 10 points a day? 100% winners? Are you desires or expectations realistic? If not, then your definition of success is holding you back and we want to redefine it. I ask on occasion in the trading room “Is it easier to make 1 point on 10 contracts or 10 points on one contract?” We know the answer is 1 point on 10. Same profit expectation, but the reality of making one point is far more probable than making 10 points on 1 contract. In addition, most traders want to do exactly that. $500 a day trading one contract. It’s just not realistic. We are not machines. We are not trading robots and as the day wears on, we wear down and will be prone to making mistakes. Also, our method, even if 90% accurate, the more times we enter a trade the closer we are to taking a loss. We compound that possibility by continuing to trade all day long and trying to meet unrealistic goals while we are fatigued.

So what are realistic goals. When you hear a trading goal and the first thing that comes to mind is “I can do that”, you are on the right track. Your inner dialogue confirms it. Our 2 10 40 Trading Plan is so simple, but also very doable for most trading once they settle in. We define a successful trading day as making 2 points per day on average. If more, it’s a bonus. If ┬áless, it’s ok because most days we do better than that. It’s a guideline to keep our perspective on track with realistic expectations. Once you made your 2 points you are successful for the day. If you want to trade more it’s a choice, not an obligation of driven from some erroneous internal goal you decided you want to achieve.

Some will argue 2 points a day is not enough. It’s not about how much or how many, it’s about how consistently you make it. Here is why defining success using our 2 10 40 Trading Plan will help you achiever you trading goals:

1) 2 points is a very doable goal both technically and mentally. You can find at least 2 or not 3 high probability setups each morning to hit your goal. Mentally, emotionally, you will not be exhausted in trying to hit such a modest goal. Your mindset becomes one of confidence instead of being ruled by uncertainty. If you miss a trade, you don’t mind, because you only need 2 or 3 to get you where you want to go.

2) When you can achieve your 2 points each day consistently, then, and only then, will be begin to add contacts to your trading. Consistency is the currency you use to purchase more contracts to trade, not your account size. Consistency is a life changing skill for traders, not trading size. Once you are consistent, you can move forward with confidence in your trading and slowly, very slowly increase contracts to reach your next monetary goal.

3) Once you decide to define your trading day success with a 2 point conservative goal, you immediately take the pressure off of yourself to perform at unrealistic levels every day. Trading becomes fun and profitable. You will be more relaxed. The more relaxed you are the better you will trade and then your confidence grows.

4) You don’t have to make 10 points a day to be successful. While there certainly are traders out there who make those points, let go of having to be one of them. 10 points in the ES is like a home run. You are always swinging for the fence. When Babe Ruth set the record for home runs he also set the record for strike outs. We don’t have to swing for the fence. We just have to be consistent hitting singles and the occasional double. If a home run comes our way, great, but let’s focus just getting the small base hits, the cash flow, and let the others worry about hitting it out of the park.

Once you bring your trading to realistic levels the stress of trading decreases dramatically and your profits will increase slowly but surely. Let go of what you think success should be, define it in a more realistic and sustainable manner, and you will begin to see changes in your trading that take you closer and closer to your goal of becoming a successful emini trader.

Good Trading!

JC